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On the promotion of cogeneration based on a useful heat demand in the internal energy market



Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004 on the promotion of cogeneration based on a useful heat demand in the internal energy market and amending Directive 92/42/EEC

Official Journal L 052 , 21/02/2004 P. 0050 - 0060

Directive 2004/8/EC of the European Parliament and of the Council

of the European Parliament and of the Council

of 11 February 2004

on the promotion of cogeneration based on a useful heat demand in the internal energy market and amending Directive 92/42/EEC


Having regard to the Treaty establishing the European Community, and in particular Article 175(1) thereof,

Having regard to the proposal from the Commission(1),

Having regard to the opinion of the European Economic and Social Committee(2),

Having regard to the opinion of the Committee of the Regions(3),

Acting in accordance with the procedure laid down in Article 251 of the Treaty(4),


  1. The potential for use of cogeneration as a measure to save energy is underused in the Community at present. Promotion of high-efficiency cogeneration based on a useful heat demand is a Community priority given the potential benefits of cogeneration with regard to saving primary energy, avoiding network losses and reducing emissions, in particular of greenhouse gases. In addition, efficient use of energy by cogeneration can also contribute positively to the security of energy supply and to the competitive situation of the European Union and its Member States. It is therefore necessary to take measures to ensure that the potential is better exploited within the framework of the internal energy market.
  2. Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003(5) establishes common rules for the generation, transmission, distribution and supply of electricity within the internal market in electricity. In this context, the development of cogeneration contributes to enhancing competition, also with regard to new market actors.
  3. The Green Paper entitled Towards a European strategy for the security of energy supply points out that the European Union is extremely dependent on its external energy supplies currently accounting for 50 % of requirements and projected to rise to 70 % by 2030 if current trends persists. Import dependency and rising import ratios heighten the risk of interruption to or difficulties in supply. However, security of supply should not be conceived as merely a question of reducing import dependency and boosting domestic production. Security of supply calls for a wide range of policy initiatives aimed at, inter alia, diversification of sources and technologies and improved international relations. The Green Paper emphasised furthermore that security of energy supply is essential for a future sustainable development. The Green Paper concludes that the adoption of new measures to reduce energy demand is essential both in terms of reducing the import dependence and in order to limit greenhouse gas emissions. In its Resolution of 15 November 2001 on the Green Paper(6), the European Parliament called for incentives to encourage a shift towards efficient energy production plants, including combined heat and power.
  4. The Commission's Communication A Sustainable Europe for a better world - A European Union Strategy for Sustainable Development presented at the Gothenburg European Council on 15 and 16 June 2001 identified climate change as one of the principal barriers to sustainable development and emphasised the need for increased use of clean energy and clear action to reduce energy demand.
  5. The increased use of cogeneration geared towards making primary energy savings could constitute an important part of the package of measures needed to comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and of any policy package to meet further commitments. The Commission in its Communication on the implementation of the first phase of the European Climate Change Programme identified promotion of cogeneration as one of the measures needed to reduce the greenhouse gas emissions from the energy sector and announced its intention to present a proposal for a Directive on the promotion of cogeneration in 2002.
  6. In its Resolution of 25 September 2002 on the Commission communication on the implementation of the first phase of the European Climate Change Programme(7), the European Parliament welcomes the idea of submitting a proposal to strengthen Community measures to promote the use of combined heat and power (CHP) and calls for prompt adoption of a Directive on the promotion of CHP.
  7. The importance of cogeneration was also recognised by the Council Resolution of 18 December 1997(8) and by the European Parliament Resolution of 15 May 1998(9) on a Community strategy to promote combined heat and power.
  8. The Council in its Conclusions of 30 May 2000 and of 5 December 2000 endorsed the Commission's Action Plan on energy efficiency and identified promotion of cogeneration as one of the short-term priority areas. The European Parliament in its Resolution of 14 March 2001 on the Action Plan on energy efficiency(10) called on the Commission to submit proposals establishing common rules for the promotion of cogeneration, where this makes environmental sense.
  9. Council Directive 96/61/EC of 24 September 1996 concerning integrated pollution prevention and control(11), Directive 2001/80/EC of the European Parliament and of the Council of 23 October 2001 on the limitation of emissions of certain pollutants into the air from large combustion plants(12) and Directive 2000/76/EC of the European Parliament and of the Council of 4 December 2000 on the incineration of waste(13) highlight the need to evaluate the potential for cogeneration in new installations.
  10. Directive 2002/91/EC of the European Parliament and of the Council of 16 December 2002 on the energy performance of buildings(14) requires the Member States to ensure that for new buildings with a total useful floor area of over 1000 m2, the technical, environmental and economic feasibility of alternative systems, such as cogeneration of heat and power, is considered and taken into account before construction starts.
  11. High efficiency cogeneration is in this Directive defined by the energy savings obtained by combined production instead of separate production of heat and electricity. Energy savings of more than 10 % qualify for the term high-efficiency cogeneration. To maximise the energy savings and to avoid energy savings being lost, the greatest attention must be paid to the functioning conditions of cogeneration units.
  12. In the context of the evaluation of primary energy savings, it is important to take into account the situation of Member States in which the most of electricity consumption is covered by imports.
  13. It is important for transparency to adopt a harmonised basic definition of cogeneration. Where cogeneration installations are equipped to generate separate electricity or heat production, such production should not be specified as cogeneration for issuing a guarantee of origin and for statistical purposes.
  14. To ensure that support for cogeneration in the context of this Directive is based on the useful heat demand and primary energy savings, it is necessary to set up criteria to determine and assess the energy efficiency of the cogeneration production identified under the basic definition.
  15. The general objective of this Directive should be to establish a harmonised method for calculation of electricity from cogeneration and necessary guidelines for its implementation, taking into account methodologies such as those currently under development by European standardisation organisations. This method should be adjustable to take account of technical progress. Application of the calculations in Annexes II and III to micro-cogeneration units could, in accordance with the principle of proportionality, be based on values resulting from a type testing process certified by a competent, independent body.
  16. The definitions of cogeneration and of high-efficiency cogeneration used in this Directive do not prejudge the use of different definitions in national legislation, for purposes other than those set out in this Directive. It is appropriate to borrow in addition the relevant definitions contained in Directive 2003/54/EC and in Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market(15).
  17. Measuring the useful heat output at the point of production of the cogeneration plant underlines the need to ensure that advantages of the cogenerated useful heat are not lost in high heat losses from distribution networks.
  18. The power to heat ratio is a technical characteristic that needs to be defined in order to calculate the amount of electricity from cogeneration.
  19. For the purpose of this Directive, the definition of cogeneration units may also include equipment in which only electrical energy or only thermal energy can be generated, such as auxiliary firing and after burning units. The output from such equipment should not be considered as cogeneration for issuing a guarantee of origin and for statistical purposes.
  20. The definition of small scale cogeneration comprises, inter alia, micro-cogeneration and distributed cogeneration units such as cogeneration units supplying isolated areas or limited residential, commercial or industrial demands.
  21. To increase transparency for the consumer's choice between electricity from cogeneration and electricity produced on the basis of other techniques, it is necessary to ensure that, on the basis of harmonised efficiency reference values, the origin of high-efficiency cogeneration can be guaranteed. Schemes for the guarantee of origin do not by themselves imply a right to benefit from national support mechanisms.
  22. It is important that all forms of electricity produced from high-efficiency cogeneration can be covered by guarantees of origin. It is important to distinguish guarantees of origin clearly from exchangeable certificates.
  23. To ensure increased market penetration of cogeneration in the medium term, it is appropriate to require all Member States to adopt and publish a report analysing the national potential for high-efficiency cogeneration and to include a separate analysis of barriers to cogeneration in the report, and of measures taken to ensure the reliability of the guarantee system.
  24. Public support should be consistent with the provisions of the Community guidelines on State aid for environmental protection(16), including as regards the non-cumulation of aid. These guidelines currently allow certain types of public support if it can be shown that the support measures are beneficial in terms of protection of the environment because the conversion efficiency is particularly high, because the measures will allow energy consumption to be reduced or because the production process will be less damaging to the environment. Such support will in some cases be necessary to further exploit the potential for cogeneration, in particular to take account of the need to internalise external costs.
  25. Public support schemes for promoting cogeneration should focus mainly on support for cogeneration based on economically justifiable demand for heat and cooling.
  26. Member States operate different mechanisms of support for cogeneration at the national level, including investment aid, tax exemptions or reductions, green certificates and direct price support schemes. One important means to achieve the aim of this Directive is to guarantee the proper functioning of these mechanisms, until a harmonised Community framework is put into operation, in order to maintain investor confidence. The Commission intends to monitor the situation and report on experiences gained with the application of national support schemes.
  27. For the transmission and distribution of electricity from high-efficiency cogeneration, the provisions of Article 7(1), (2) and (5) of Directive 2001/77/EC as well as relevant provisions of Directive 2003/54/EC should apply. Until the cogeneration producer is an eligible customer under national legislation within the meaning of Article 21(1) of Directive 2003/54/EC, tariffs related to the purchase of additional electricity sometimes needed by cogeneration producers should be set according to objective, transparent and non-discriminatory criteria. Especially for small scale and micro-cogeneration units access to the grid system of electricity produced from high-efficiency cogeneration may be facilitated subject to notification to the Commission.
  28. In general, cogeneration units up to 400 kW falling within the definitions of Council Directive 92/42/EEC of 21 May 1992 on efficiency requirements for new hot-water boilers fired with liquid or gaseous fuels(17) are unlikely to meet the minimum efficiency requirements therein and should therefore be excluded from that Directive.
  29. The specific structure of the cogeneration sector, which includes many small and medium-sized producers, should be taken into account, especially when reviewing the administrative procedures for obtaining permission to construct cogeneration capacity.
  30. Within the purpose of this Directive to create a framework for promoting cogeneration it is important to emphasise the need for a stabile economical and administrative environment for investments in new cogeneration installations. Member States should be encouraged to address this need by designing support schemes with a duration period of at least four years and by avoiding frequent changes in administrative procedures etc. Member States should furthermore be encouraged to ensure that public support schemes respect the phase-out principle.
  31. The overall efficiency and sustainability of cogeneration is dependent on many factors, such as technology used, fuel types, load curves, the size of the unit, and also on the properties of the heat. For practical reasons and based on the fact, that the use of the heat output for different purposes requires different temperature levels of the heat, and that these and other differences influence efficiencies of the cogeneration, cogeneration could be divided into classes such as: industrial cogeneration, heating cogeneration and agricultural cogeneration.
  32. In accordance with the principles of subsidiarity and proportionality as set out in Article 5 of the Treaty, general principles providing a framework for the promotion of cogeneration in the internal energy market should be set at Community level, but the detailed implementation should be left to Member States, thus allowing each Member State to choose the regime, which corresponds best to its particular situation. This Directive confines itself to the minimum required in order to achieve those objectives and does not go beyond what is necessary for that purpose.
  33. The measures necessary for the implementation of this Directive should be adopted in accordance with Council Decision 1999/468/EC of 28 June laying down the procedures for the exercise of implementing powers conferred on the Commission(18),